May 31, 2019

Market Insider | Stocks making the biggest moves premarket: Ford, GM, Uber, Gap, Costco, Ulta, Dell & more

Peter Schacknow



Check out the companies making headlines before the bell:

Big Lots – The discount retailer reported adjusted quarterly earnings of 92 cents per share, compared to a consensus estimate of 70 cents a share. Revenue was slightly above forecasts, although comparable-store sales were up a less-than-expected 1.5%. Big Lots also raised its full-year profit forecast.
Genesco – The apparel and accessories retailer earned an adjusted 33 cents per share for its latest quarter, well above the consensus estimate of 4 cents a share. Revenue beat forecasts as well, and a comparable-store sales increase of 5% beat the 0.6% consensus of analysts polled by Refinitiv.
Ford Motor, General Motors – These and other auto stocks are falling this morning following President Donald Trump's threat to impose tariffs on Mexican imports. GM is the largest automaker in Mexico with 14 plants, among the companies taking advantage of proximity to the U.S. border and lower labor costs.
Uber Technologies — Uber posted a loss of $1.01 billion in its first quarter as a public company, matching Wall Street's forecasts. Revenue was slightly above expectations and up 20% over a year earlier.
Gap Inc. – Gap earned an adjusted 24 cents per share for its latest quarter, 8 cents a share below consensus forecasts. The apparel retailer's revenue was also below forecasts, and a same store sales decline of 4% was larger than the 1.2% drop that analysts had been expecting. The same-store sales decline was most prominent at the Gap flagship brand.
Costco – Costco beat estimates by 7 cents a share, with adjusted quarterly profit of $1.89 per share. The warehouse retailer's revenue was also above forecasts. Comparable-store sales rose 5.5%, just under the consensus forecast for a 5.6% increase.
Ulta Beauty – Ulta reported quarterly profit of $3.26 per share, compared to a consensus estimate of $3.07 a share. The cosmetics retailer's revenue was slightly below forecasts, with comparable-store sales in line with estimates. Ulta also raised its full-year guidance.
Williams-Sonoma – Williams-Sonoma came in 12 cents a share above estimates, with quarterly earnings of 81 cents per share. The housewares retailer's revenue matched Street forecasts. Comparable-store sales were up 3.5%, more than double the 1.7% consensus estimate. Williams-Sonoma also raised its full-year earnings outlook.
Dell Technologies – Dell reported adjusted quarterly earnings of $1.45 per share, 24 cents a share above estimates. The computer maker's revenue came in below forecasts on slowing demand in China.
Amazon.com – Amazon is interested in buying Boost Mobile from T-Mobile US and Sprint, according to Reuters. T-Mobile and Sprint are planning to sell the prepaid mobile brand in order to get their planned merger approved by regulators.
Okta – Okta reported an adjusted quarterly loss of 19 cents per share, 2 cents a share smaller than Wall Street had expected. The maker of identity management software also saw better-than-expected revenue during the quarter, as subscription revenue grew 52% compared to a year earlier.
Kraft Heinz – Piper Jaffray upgraded the food maker's stock to "neutral" from "underweight," saying caution about the company's outlook is reflected in its current valuation. The stock has lost more than half its value over the past year.

Source: CNBC

News | Market News | Boost Mobile Deal: Amazon Said Access to Spectrum Essential

By Deborah DSouza Updated May 31, 2019



The latest news report about Amazon.com Inc. (AMZN) has left ordinary investors and industry experts equally puzzled. According to two unnamed sources speaking with Reuters, the e-commerce giant is interested in buying prepaid cellphone wireless service Boost Mobile from U.S. carriers T-Mobile US Inc. (TMUS) and Sprint Corp. (S).
A source added that the main reasons Amazon is considering a deal is because it can then use the combined company's (T-Mobile and Sprint are seeking regulatory approval for a merger) wireless network for at least six years and buy any wireless spectrum divested.
Boost is one of many mobile virtual network operators (MVNOs) reliant on Sprint, meaning it is a carrier that doesn't own any network infrastructure or spectrum licenses and resells minutes it buys wholesale from mobile network operators (MNOs). It has 7 million to 8 million customers, according to estimates from Cowen analysts cited by Reuters, and Sprint has promised to sell it to placate regulators.
Why Amazon is after a wireless network or spectrum is not clear and speculation online is abundant. Does Amazon want to sell phones? Does it want to be the fourth major mobile operator in the country? Does it want to control all the ways it deals with its customers? The possibilities are endless for a juggernaut like Amazon.
It's also good to remember that in 2017, The Wall Street Journal reported the company was interested in a wireless partnership with Dish Network Corp. According to sources, the idea was that Amazon, as a founding partner of Dish’s new wireless network, "could offer an option for Prime members to pay a little more a month for a connectivity or phone plan."

Amazon: Access to Spectrum Essential

Amazon spent a record $14.4 million on lobbying government entities in 2018, which was more than any other tech company. In 2017, it spent $13 million and it has spent almost $4 million in the first quarter of this year.
The lobbying records, from OpenSecrets, offer us some interesting insight. Amazon first mentioned "spectrum" and "broadband and spectrum" in its filings in 2017 and continued to do so in 2018. In 2018, the company also joined the Dynamic Spectrum Alliance, an organization that lobbies for laws and regulations "that will lead to more efficient and effective spectrum utilization" and counts Alphabet Inc. (GOOG), Facebook Inc. (FB) and Microsoft Corp. (MSFT) among its members.
“Our products and services are smarter, faster and more convenient because we have access to unlicensed wireless spectrum,” said Brian Huseman, VP of public policy of Amazon, in a statement at that time. “Access to spectrum is essential for the creation and growth of ground breaking, consumer-focused technologies and we look forward to working with the Dynamic Spectrum Alliance to ensure we maintain it.”
The company lobbied on a law that increases unlicensed spectrum available for mobile and fixed wireless broadband use. But it looks like it is now interested in securing its interests by owning spectrum. Especially since the advent of 5G internet will increase the demand for airwaves.
"Three words: wholesale transfer pricing," tweeted Microsoft Senior Director Tren Griffin about the deal. "The U.S. MVNO graveyard is populated with many who died from 'supplier bargaining power.'"

Source: Investopedia

DealBook Briefing | Trump Makes a Huge Economic Gamble on Immigration

1 minute



A Honda car plant in Celaya, Mexico.CreditEduardo Verdugo/Associated Press
Image
A Honda car plant in Celaya, Mexico.CreditCreditEduardo Verdugo/Associated Press
Good Friday. (Want this by email? Sign up here.)
President Trump plans to impose a 5 percent tariff on all imported goods from Mexico starting June 10, then “gradually increase” it until the flow of undocumented immigrants across the border into the U.S. stops, the NYT reports.
• “Tariffs would be raised to 10 percent on July 1 ‘if the crisis persists,’ and then by an additional 5 percent each month for three months.”

Source: NYT

BBC Newsnight Video | Helle Thorning-Schmidt: 'There is still a role for social democracy'

Economics | You Can Still Buy a House With Gold Bars in Vietnam

By John Boudreau and Nguyen Dieu Tu Uyen



Vietnamese use gold bars to buy everything from homes to motorbikes - and save them for retirement.
Vietnamese use gold bars to buy everything from homes to motorbikes - and save them for retirement.
Photographer: Maika Elan/Bloomberg

Vietnam may be one of the world’s fastest-growing economies, yet it’s still in the dark ages when it comes to joining the global trend toward cashless transactions. To understand why, look no further than to consumers like Tran Van Nhan, who recently bought his two-bedroom home in Hanoi with gold and a sack of cash.
“We paid almost half in gold bars and the rest in cash,” Nhan, a 47-year-old shopkeeper, said of his new $138,000 condo. “We did that because we and the flat’s owner didn’t want to do a bank transfer. We are so used to buying things with cash and gold.”
Prime Minister Nguyen Xuan Phuc is trying to drag his citizens into the modern era of digital payments, reduce the amount of U.S. dollars in circulation in the country and establish the dominance of the nation’s domestic currency, the Vietnamese dong. That also means introducing Vietnamese households to credit cards, bank transfers and digital payments rather than carrying around piles of cash and bullion for purchases.
Behind the push is growing frustration among Vietnamese officialdom about the cost of printing banknotes and the need for more transparent payment records in order to crack down on tax evasion and money laundering, a growing problem as the $237-billion economy continues to expand dramatically.
Officials have their work cut out for them: Just 31% of Vietnamese adults have bank accounts and more than 95% of payments are made with cash and gold, according to the government.
“It’s embedded in the culture,” said Hanoi-based economist Nguyen Tri Hieu, senior adviser to National Citizen Bank. “It’s holding Vietnam back. The government recognizes that to integrate Vietnam into the world economy, its cash-based economy has to change.”
The government has made modernizing the nation’s payments a top priority. The prime minister is directing banks to reduce cash transactions to less than 10% by the end of 2020. E-commerce is being promoted at malls and supermarkets in major cities and the government wants at least 70% of Vietnamese aged 15 and older to have bank accounts.
Vietnam's Premier Nguyen Xuan Phuc seeks 'New Ways' to Survive U.S.-China Trade War
Nguyen Xuan Phuc
Photographer: Maika Elan/Bloomberg
An exasperated Phuc also ordered the central bank this year to convince more Vietnamese to use digital payment systems, such as QR codes. A new regulation in January mandated providers of public services -- from hospitals to schools -- to stop accepting cash by December.
South Korea, though, offers a cautionary tale of what can happen if a society pivots too quickly to mass adoption of credit cards. A credit binge in the early 2000s led to massive household debt. About one in 13 of South Korea’s 48 million people in 2004 were three months or more behind on debt payments, with two-thirds of them credit-card defaulters.

Payments Revolution?

Unlike in China, home to the world’s biggest mobile payments market, most of Vietnam’s 97 million citizens rely on paper currency -- and precious metals -- to buy everything from groceries to automobiles. Shop owners make numerous trips to banks during the week, hauling sacks of Vietnam dong like Santas on motorbikes.
Vietnam would appear poised for a payment revolution. Its young population is tech savvy, with 70% using smartphones and having easy access to digital payment systems offered by local startups. Mercedes-Benz sedans tussle with Honda motorbikes on narrow streets in Hanoi and Ho Chi Minh City. Building cranes fill urban skies as luxury towers and high-rise office buildings rise up from congested streets. It has a fast-growing middle class sending children abroad for school in an economy with newly minted millionaires and billionaires.
Amazon.com Inc., Alibaba Group Holding Ltd. and other global e-commerce companies have set up operations in Vietnam, where revenue from e-commerce swelled to $8 billion in 2018, doubling from three years ago as about a third of the population shops online, according the trade ministry. Yet, most digital purchases are paid with cash.
Many Vietnamese, who remember double-digit inflation at its peak of 28.3% in Aug. 2008, still like to keep their savings in greenbacks and gold stored in home safes. Vietnamese hold an estimated 400 tons of gold, economist Hieu said. “People are still hoarding gold,” he said. “I have friends with gold at home.”
Meanwhile, just 4.1% of Vietnamese own credit cards, according to Standard Chartered Plc. “About 80% of my clients pay cash and I also feel more comfortable taking cash than credit card payments,” said Nguyen Thu Huong, 44, who operates a clothes shop in Ho Chi Minh City’s central financial district. Her credit card reader was covered in dust. “The government has been trying to get people to use more credit cards, but frankly I think it’s still a long way to go before a lot of people use them.”
Vietnam's Hurdle to Economic Modernity: Buying Homes With Gold
Vietnamese prefer cash over credit cards or digital payments.
Photographer: Maika Elan/Bloomberg
Vietnam’s inability to pivot to a modern payment system is holding the economy back. It’s virtually impossible for many small- and medium-sized enterprises to get loans because financial institutions frequently have no way to verify revenue, Hieu said.
“They have cash books they show to the tax authority but there is no way for a bank to confirm if they are accurate,” he said.

Economic Reforms

The predicament reflects how the culture began its transformation to a capitalist society just a few decades ago with the doi moi reforms launched by the politburo that opened the Communist country to a market-oriented economy. The nation’s rapid growth -- the government expects gross domestic product to expand at least 6.8% this year -- is outpacing its ability to modernize the economy.
Authorities have yet to put in place the regulatory framework needed for wide use of mobile payments or the establishment of agents that can represent banks in rural areas that lack banking services, said Alwaleed Alatabani, the World Bank’s head finance specialist in Vietnam.
The central bank is expected to submit a proposal for regulating non-cash transactions as early as the third quarter to the prime minister , according to the government website.
Gold Jewelry Store in Hanoi
Shops that sell and buy gold bars and jewelry are found on virtually every main street in Vietnam’s major cities.
Photographer: Maika Elan/ Bloomberg
“It’s not easy to change,” said Tran Thi Le, a 35-year-old Ho Chi Minh City secretary who keeps gold and foreign currencies in a home safe. “Keeping money in gold or strong foreign currencies, like U.S. dollars or euros, is a long-standing habit for most Vietnamese people.”
Indeed, Hanoi shop owner Nhan and his wife set aside money to buy gold bars. “I want to save gold so that we can use it in the future for our retirement,” he said. “We feel safer with gold.”
(Updates with proposed central bank regulations in the 19th paragraph.)

Source: Bloomberg

World News | China says hopes Canada understands consequences of siding with U.S.

Reuters Editorial



BEIJING (Reuters) - China hopes Canada understands the consequences of siding with the United States and doing its bidding, China’s foreign ministry said on Friday, after U.S. Vice President Mike Pence called for the release of two Canadians detained in China.
FILE PHOTO: Picture of Canadian and Chinese flags taken prior to the meeting with Canada's Prime Minister Justin Trudeau and China's President Xi Jinping at the Diaoyutai State Guesthouse on December 5, 2017, in Beijing. Fred Dufour/Pool via REUTERS/File Photo
Chinese authorities detained Canadian businessman Michael Spavor and former diplomat Michael Kovrig in December, shortly after Canada arrested China-based Huawei Technologies Co Ltd’s Chief Financial Officer, Meng Wanzhou, on a U.S. warrant.
She faces extradition to the United States on charges she conspired to defraud global banks about Huawei’s relationship with a company operating in Iran. She and the company have denied the charges and China has called for her release.
Asked about Pence comments that U.S. President Donald Trump would speak with Chinese President Xi Jinping about the detained Canadians at a G20 meeting in Japan in June, Chinese foreign ministry spokesman Geng Shuang implied Canada was to blame for its problems in China.
“We hope that the Canadian side will come to understand the full consequences of pulling chestnuts from the fire on behalf of the United States, and not inflict more harm on themselves,” Geng told reporters, without elaborating.
Pence, who has taken a hard line on China, discussed the detained Canadians with Prime Minister Justin Trudeau in Ottawa on Thursday, where they also talked about Huawei and China trade issues.
Kovrig and Spavor were formally charged with espionage this month. China has also cut off imports of key Canadian commodities in an effort to press it.
Canada has called the arrests arbitrary.
During his visit, Pence thanked Canada for standing up for the rule of law in detaining Meng.
While Canada says China has made no specific link between the detentions of the two men and Meng’s arrest, experts and former diplomats say they have no doubt it is using their cases to pressure Canada.
Reporting by Cate Cadell; Editing by Ben Blanchard, Robeert Birsel

Sourve: Reuters

World News | North Korea executes envoy in a purge after failed U.S. summit: media

Hyonhee Shin


SEOUL (Reuters) - North Korea executed its nuclear envoy to the United States as part of a purge of officials who steered negotiations for a failed summit between leader Kim Jong Un and U.S. President Donald Trump, a South Korean newspaper said on Friday.
Kim Hyok Chol was executed in March at Mirim Airport in Pyongyang, along with four foreign ministry executives after they were all charged with spying for the United States, the Chosun Ilbo reported, citing an unidentified source with knowledge of the situation.
“He was accused of spying for the United States for poorly reporting on the negotiations without properly grasping U.S. intentions,” the source was quoted as saying.
The February summit in the Vietnamese capital of Hanoi, the second between Kim and Trump, failed to reach a deal because of conflicts over U.S. calls for complete denuclearization of the Korean peninsula and North Korean demands for sanctions relief.
Reuters was unable to independently confirm the report. Previously, some North Korean officials have reportedly been executed or purged only to reappear with a new title.
U.S. State Department officials said they had no information to confirm the report.
A spokeswoman at South Korea’s Unification Ministry declined to comment. An official at the presidential Blue House in Seoul said it was inappropriate to comment on an issue that should first be verified.
A diplomatic source told Reuters there were signs Kim Hyok Chol and other officials were punished for the breakdown of the summit, such as by being sent to a labor camp for reeducation, but there was no evidence they were executed.
Kim Yong Chol, Kim Jong Un’s right-hand man and the counterpart of U.S. Secretary of State Mike Pompeo before the Hanoi summit, had also been sent to a labor and reeducation camp in Jagang Province near the Chinese border, the Chosun Ilbo reported.
Key officials who worked with Kim Yong Chol have been out of the public eye since the summit, while seasoned diplomats who previously appeared to have been sidelined, including vice foreign minister Choe Son Hui, were seen returning to the spotlight.
FILE PHOTO - Kim Hyok Chol, North Korea's special representative for U.S. affairs, leaves the Government Guesthouse in Hanoi, Vietnam, February 23, 2019. REUTERS/Athit Perawongmetha
A South Korean lawmaker told Reuters in April that Kim Yong Chol, a hawkish former spymaster, had been removed from a key party post.

RISE AND FALL

Kim Hyok Chol was seen as a rising star when he was appointed to spearhead working-level talks with U.S. nuclear envoy Stephen Biegun weeks before the Hanoi summit.
However, little was known about his expertise or the role he undertook during those talks. The other four executed alongside him included diplomats working on Vietnam relations, the Chosun report said.
“This is a man who might provide some tactical advice to the leader but is otherwise a message bearer with little negotiating or policymaking latitude,” said Michael Madden, a North Korea leadership expert at the Washington-based Stimson Centre.
“Instead, they put in someone like Kim Hyok Chol to insulate Choe Son Hui and more substantive diplomatic personnel, to a certain degree he is expendable and his superiors are not.”
Among the penalized officials were Kim Song Hye, who led preparations as part of Kim Yong Chol’s team, and Sin Hye Yong, a newly elevated interpreter for the Hanoi summit. They were said to have been detained in a camp for political prisoners, the newspaper said.
The diplomatic source said Kim Song Hye’s punishment seemed inevitable because she was a “prime author” of the North’s plan to secure sanctions relief in return for dismantling the Yongbyon main nuclear complex.
Slideshow (3 Images)
The idea was rejected by the United States demanding a comprehensive roadmap for denuclearization.
Kim Song Hye had also worked closely with Kim Yo Jong, the North Korean leader’s younger sister and a senior party official whom Kim Song Hye accompanied to South Korea for the Winter Olympics last year.
Kim Yo Jong was also lying low, the paper reported, citing an unidentified South Korean government official.
Madden, however, said Kim Yo Jong’s status remained unchanged as Kim Jong Un’s top aide, citing her attendance at key party meetings in April and appearance in state media reports.
Sin was charged with making critical interpretation mistakes that included missing an unspecified “last-minute offer” the North Korean leader supposedly made as Trump was about to walk out, Chosun reported.
North Korea’s official party mouthpiece Rodong Sinmun warned on Thursday that “two-faced” officials would face the “stern judgment of the revolution”.
“It is an anti-Party, anti-revolutionary act to pretend to be revering the leader in front of him when you actually dream of something else,” it said in a commentary.
“There are traitors and turncoats who only memorize words of loyalty toward the Leader and even change according to the trend of the time,” it said.
The newspaper accused Jang Song Thaek, Kim Jong Un’s uncle, of committing “anti-party, anti-revolutionary acts” after he was executed in December 2013.
Hong Min, a senior fellow at the Korea Institute for National Unification in Seoul, said it was possible Kim Hyok Chol and other officials faced some penalty but further verification was needed.
“Executing or completely removing people like him would send a very bad signal to the United States because he was the public face of the talks and it could indicate they are negating all they have discussed,” Hong said.
Reporting by Joyce Lee and Hyonhee Shin; Additional reporting by David Brunnstrom in Berlin; Editing by James Dalgleish, Paul Tait and Lincoln Feast.

Source: Reuters

World News | North Korea executes envoy in a purge after failed U.S. summit: media Originally published on May 30, 2019

Hyonhee Shin

SEOUL (Reuters) - North Korea executed its nuclear envoy to the United States as part of a purge of officials who steered negotiations for a failed summit between leader Kim Jong Un and U.S. President Donald Trump, a South Korean newspaper said on Friday.
Kim Hyok Chol was executed in March at Mirim Airport in Pyongyang, along with four foreign ministry executives after they were all charged with spying for the United States, the Chosun Ilbo reported, citing an unidentified source with knowledge of the situation.
“He was accused of spying for the United States for poorly reporting on the negotiations without properly grasping U.S. intentions,” the source was quoted as saying.
The February summit in the Vietnamese capital of Hanoi, the second between Kim and Trump, failed to reach a deal because of conflicts over U.S. calls for complete denuclearization of the Korean peninsula and North Korean demands for sanctions relief.
Reuters was unable to independently confirm the report. Previously, some North Korean officials have reportedly been executed or purged only to reappear with a new title.
U.S. State Department officials said they had no information to confirm the report.
A spokeswoman at South Korea’s Unification Ministry declined to comment. An official at the presidential Blue House in Seoul said it was inappropriate to comment on an issue that should first be verified.
A diplomatic source told Reuters there were signs Kim Hyok Chol and other officials were punished for the breakdown of the summit, such as by being sent to a labor camp for reeducation, but there was no evidence they were executed.
Kim Yong Chol, Kim Jong Un’s right-hand man and the counterpart of U.S. Secretary of State Mike Pompeo before the Hanoi summit, had also been sent to a labor and reeducation camp in Jagang Province near the Chinese border, the Chosun Ilbo reported.
Key officials who worked with Kim Yong Chol have been out of the public eye since the summit, while seasoned diplomats who previously appeared to have been sidelined, including vice foreign minister Choe Son Hui, were seen returning to the spotlight.

FILE PHOTO - Kim Hyok Chol, North Korea's special representative for U.S. affairs, leaves the Government Guesthouse in Hanoi, Vietnam, February 23, 2019. REUTERS/Athit Perawongmetha
A South Korean lawmaker told Reuters in April that Kim Yong Chol, a hawkish former spymaster, had been removed from a key party post.

RISE AND FALL

Kim Hyok Chol was seen as a rising star when he was appointed to spearhead working-level talks with U.S. nuclear envoy Stephen Biegun weeks before the Hanoi summit.
However, little was known about his expertise or the role he undertook during those talks. The other four executed alongside him included diplomats working on Vietnam relations, the Chosun report said.
“This is a man who might provide some tactical advice to the leader but is otherwise a message bearer with little negotiating or policymaking latitude,” said Michael Madden, a North Korea leadership expert at the Washington-based Stimson Centre.
“Instead, they put in someone like Kim Hyok Chol to insulate Choe Son Hui and more substantive diplomatic personnel, to a certain degree he is expendable and his superiors are not.”
Among the penalized officials were Kim Song Hye, who led preparations as part of Kim Yong Chol’s team, and Sin Hye Yong, a newly elevated interpreter for the Hanoi summit. They were said to have been detained in a camp for political prisoners, the newspaper said.
The diplomatic source said Kim Song Hye’s punishment seemed inevitable because she was a “prime author” of the North’s plan to secure sanctions relief in return for dismantling the Yongbyon main nuclear complex.

Slideshow (3 Images)
The idea was rejected by the United States demanding a comprehensive roadmap for denuclearization.
Kim Song Hye had also worked closely with Kim Yo Jong, the North Korean leader’s younger sister and a senior party official whom Kim Song Hye accompanied to South Korea for the Winter Olympics last year.
Kim Yo Jong was also lying low, the paper reported, citing an unidentified South Korean government official.
Madden, however, said Kim Yo Jong’s status remained unchanged as Kim Jong Un’s top aide, citing her attendance at key party meetings in April and appearance in state media reports.
Sin was charged with making critical interpretation mistakes that included missing an unspecified “last-minute offer” the North Korean leader supposedly made as Trump was about to walk out, Chosun reported.
North Korea’s official party mouthpiece Rodong Sinmun warned on Thursday that “two-faced” officials would face the “stern judgment of the revolution”.
“It is an anti-Party, anti-revolutionary act to pretend to be revering the leader in front of him when you actually dream of something else,” it said in a commentary.
“There are traitors and turncoats who only memorize words of loyalty toward the Leader and even change according to the trend of the time,” it said.
The newspaper accused Jang Song Thaek, Kim Jong Un’s uncle, of committing “anti-party, anti-revolutionary acts” after he was executed in December 2013.
Hong Min, a senior fellow at the Korea Institute for National Unification in Seoul, said it was possible Kim Hyok Chol and other officials faced some penalty but further verification was needed.
“Executing or completely removing people like him would send a very bad signal to the United States because he was the public face of the talks and it could indicate they are negating all they have discussed,” Hong said.
Reporting by Joyce Lee and Hyonhee Shin; Additional reporting by David Brunnstrom in Berlin; Editing by James Dalgleish, Paul Tait and Lincoln Feast.

Source: Reuters

Hot Topics | | Bond yields are back at record lows – why are investors so scared?

By: John Stepek



Donald Trump © Getty Images
Donald Trump’s latest tariffs on Mexican goods have increased the risk of a protectionist spiral


Every day, MoneyWeek's executive editor John Stepek and guest contributors explain how current economic and political developments are affecting the markets and your wealth, and give you pointers on how you can profit.
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In July 2016, bond yields across the globe hit what I thought would prove to be their nadir.
It seems that I was wrong.
The yield on ten-year German bunds has, almost literally as I type this, slid below the depths it last plumbed in the wake of the Brexit vote.
So what’s going on?

Germany is particularly vulnerable to a global trade crash

In July 2016, the ten-year German bund yield fell to negative 0.19%. In other words, investors were paying the German government for the privilege of lending to it (to be fair, investors in Swiss debt were paying a lot more).
For a long time, it looked as though that was the low. Investors didn’t like the idea of Brexit, but they were growing less concerned about a blow-up in the eurozone, and the US – while distracted by bad-tempered electioneering – was doing well economically.
And yet, this morning, we’re back where we were in July 2016. In fact, we’re even lower. German bund yields are at their lowest level since at least 1990, according to Bloomberg. The Daily Telegraph goes a little further with a headline that says they haven’t been this low in 700 years, although I’m not entirely sure where that analysis stems from.
Anyway, the point is – they’re at fresh record lows. That’s not a good sign, however you frame it.
So what’s going on?
There are elements of this story that are unique to Germany and the eurozone. Bond yields in the US have fallen too, but they’re not yet back at record lows. Let’s look at those first.
Firstly, remember that the European Central Bank (ECB) is maintaining current levels of quantitative easing (QE). In other words, while it’s not growing its balance sheet, it’s not shrinking it either. That means that when a bond matures, it needs to use the proceeds to buy another to replace it.
This, notes Marcus Ashworth on Bloomberg, is “a key factor in why German ten-year benchmark bonds have negative yields again… When yields are this minuscule, even the ECB’s reinvestment of the money from maturing bonds… has a disproportionate effect on prices. It means there’s little left to satisfy demand once the central bank has done its buying.”
In other words, there’s lots of demand and supply – even although there’s plenty of it, it’s not as though eurozone countries aren’t issuing debt – can’t keep up.
Secondly, Germany is particularly vulnerable to protectionism and its effect on global trade. One reason the record has been hit again this morning is because of the news that Donald Trump has just slapped a 5% tariff on all Mexican imports.
The move will start from 10 June. Trump says he wants Mexico to take more action to stem illegal immigration. He also says that the tariffs will climb by 5% a month until 1 October, when they’ll be at 25%.
This introduces a new level of uncertainty into trade. The US and Mexico seemed to have been getting along better as recently as earlier this month, after the US dropped tariffs on steel and aluminium products from Mexico and Canada, after renegotiating the NAFTA trade pact.
Markets had rather started to assume that maybe Trump was concentrating on dealing with China first. But if he can multitask – if he can just wake up and decide to slap tariffs on Mexico for a non-trade related reason – then that just reawakens all of those fears about turning his sights on car manufacturing in Europe, for example.
In short, a more protectionist world hits export-reliant economies hardest in the first instance. So this is particularly bad news for Germany (although it’s pretty bad all round as far as I can see). Indeed, it’s bad for the eurozone in general.
So there are elements of this that are eurozone specific.

How a deflation scare could be followed by an inflation shock

However, while it would be nice to brush it off as a local disturbance, that’s just not possible.
Yields might not be at record lows in the US, but they have fallen hard in the last few months. Same goes for the UK. So what does it mean?
Put simply, investors are scared that there’s going to be a recession. As a result, they’re betting that interest rates will have to fall or money printing will have to restart. Therefore, why not own bonds? After all, equities won’t do much for your in a recession as corporate earnings collapse.
You can see the logic. The risk of a protectionist spiral is starting to look quite real. The current expansion is long in the tooth – they might not die of old age, but someone usually finds a way to kill them eventually. A recession is only a matter of time. That’s how cycles work.
And yet, I’m still not entirely convinced that it makes sense for bond yields to be sitting where they are.
Here’s a worrying thought. We all agree that populations are feeling restive. They’re not satisfied with the quality of leadership being shown by our politicians. They want change. They are happy to at least contemplate radical ideas and policies.
This is happening at a time of full or near-full employment around the globe. So it’s happening at a time where most people’s individual economic circumstances are acceptable, and full-on economic hardship is limited to a relative minority.
What happens if we get a recession, and unemployment starts to rise? Does protectionism become more, or less, popular? Do demands for “money printing for the people” grow louder or drop in volume?
It’s pretty obvious. And the thing is, both protectionism and money printing for the people (rather than financial institutions), are inflationary.
We’ve been so long without inflation that we seem to have forgotten that a recession can go hand in hand with rising prices – it’s called stagflation.
Cover of MoneyWeek magazine issue no 949, Friday 31 May 2019In short, I can see why bond yields are sliding, and I increasingly think that markets are right to be worried. But I can see a deflationary scare being followed rapidly by an inflationary wake-up call.
Whatever else you own, do make sure to hang on to some gold. Oh, and if you don’t yet subscribe to MoneyWeek, start now – get your first six issues free here.
In our latest issue, I look at how to protect your portfolio in the event of a Jeremy Corbyn government – here’s the cover image as a sneak preview.

Source: MoneyWeek

Immigration | Trump says U.S. to impose 5 percent tariff on all Mexican imports beginning June 10 in dramatic escalation of border clash

By Damian Paletta , Damian Paletta Reporter covering economic policy Email Bio Follow



President Trump on Thursday said he would impose a 5 percent tariff on all goods entering from Mexico unless it stopped the flow of illegal immigration to the United States, a dramatic escalation of his border threats that could have sweeping implications for both economies.
The White House plans to begin levying the import penalties on June 10 and ratchet the penalties higher if the migrant flow isn’t halted. Trump said he would remove the tariffs only if all illegal migration across the border ceased, though other White House officials said they would be looking only for Mexico to take major action.
After the 5 percent tariffs are imposed on June 10, the White House said it would increase the penalties to 10 percent on July 1 and then an additional 5 percent on the first day of each month for three months. The tariffs would stay at 25 percent “until Mexico substantially stops the illegal inflow of aliens coming through its territory,” a statement by the president said.
The economic consequences of Trump’s new plan could be swift and severe. Tariffs are paid by companies that import products, so U.S. firms would pay the import penalties and then likely pass some costs along to consumers. Mexico exported $346.5 billion in goods to the United States last year, from vehicles to fruits and vegetables. And many manufactured items cross the border several times as they are being assembled.
White House officials did not immediately explain how driving up the cost of Mexican goods might stem the flow of migrants. If the tariffs damaged the Mexican economy, more of its citizens would try to cross the border to find work in the United States, experts said.
The United States, Mexico and Canada have agreed to replace the North American Free Trade Agreement with a new plan that changes multiple industries. (Jhaan Elker/The Washington Post)
“Mexico is our friend and neighbor, a partner in trade and security,” said Glenn Hamer, chief executive of the Arizona Chamber of Commerce and Industry. “The president’s announcement is baffling and, if carried out, will be terribly damaging.”
Mexico vowed a response that could pitch the Trump administration into a full-scale trade war with one of its largest trading partners. This comes just days after the White House and China imposed stiff penalties on each other’s exports.
At a news conference, Mexico’s deputy foreign minister for North America, Jesús Seade, said the threatened tariffs would be “disastrous” and added that Mexico would respond “strongly.”
In a letter sent Thursday evening, Mexican President Andrés Manuel López Obrador addressed Trump in harsh terms, a marked change from the diplomatic posture he has tried to adopt since being elected last July. “President Trump, social problems can’t be resolved through taxes or coercive measures,” López Obrador wrote.
He said he would send his foreign minister to Washington on Friday “to arrive at an agreement that benefits both nations.”
But even as López Obrador suggested that there was a diplomatic solution, he unloaded on Trump for his administration’s immigration policy.
“How did a country of fraternity for all the migrants in the world become, from night to dawn, a ghetto, a closed space,” where migrants are stigmatized and mistreated, López Obrador wrote. He went on: “The statue of liberty is not an empty symbol.”
A view of Ciudad Juarez, Chihuahua State, on May 20. About 7,000 migrants are waiting to enter the United States via El Paso. (Paul Ratje/AFP/Getty Images)
Trump has often tried to use tariffs and other import penalties as a way to pressure countries into changing behavior, but he has not yet done it on such a scale. In addition, he wrongly has said the cost of tariffs are shouldered by the countries that he targets.
Even some White House officials were caught off guard by the announcement, though planning within the West Wing escalated on Thursday afternoon. Vice President Pence was in Canada on Thursday, meeting with Canadian Prime Minister Justin Trudeau about ratifying an updated version of the North American Free Trade Agreement with Mexico, but it’s unclear if Trump’s newest tariff threat could upend those discussions.
White House officials believe Trump has powers under a 1977 law to impose tariffs on all imports from certain countries if he cites a “national emergency.” And several months ago, Trump declared a national emergency along the Mexico border because of a surge in migrants crossing into the United States.
But the 1977 law has never been used to impose tariffs in this way before, and Trump’s new actions could face legal challenges because of the scope of companies that would be impacted.
The new tariff threat combines two of Trump’s favorite issues — immigration and trade — and comes as he has struggled to score victories on either one.
A central element of Trump’s campaign was his assertion that the United States was being “invaded” by people across the Mexico border, a sentiment that resonated with many supporters. He has tried to rework trade rules and build a wall to stop the flow of migrants, but so far his efforts have failed to stem the surge of people crossing the border. Crossings at the U.S.-Mexico border, driven by Central American migrants seeking asylum, have peaked to their highest level in more than a decade.
One senior White House official, who spoke on the condition of anonymity to discuss internal deliberations, said there is broad support across the administration to push Mexico further by using tariffs to force action. Other aides, however, tried to talk Trump out of the idea, arguing that the threat would scare global markets and undermine passage of the United States-Mexico-Canada Agreement, or USMCA, which was just sent to Congress on Thursday by the White House. The trade deal aims to curb the type of tariffs Trump is now threatening to impose on Mexico.
“Trade policy and border security are separate issues,” Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, said in a statement. “This is a misuse of presidential tariff authority and counter to congressional intent. Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.”
The president teased his plans on Thursday morning, telling reporters outside the White House that he was preparing a “big-league statement” about the border surge, without going into detail.
“We are going to do something very dramatic on the border because people are coming into our country,” Trump said.
On Wednesday, more than 1,000 Central Americans crossed into the El Paso area to surrender to U.S. authorities, the largest group of migrants that U.S. border agents have taken into custody at a single time. Trump tweeted a video of the apprehension late Thursday, declaring that “Democrats need to stand by our incredible Border Patrol and finally fix the loopholes at our Border!”
Deportations by Mexican authorities have increased threefold compared with the same period last year, according to the latest statistics, but the vast majority of Central American migrants appear to be successful at evading arrest en route to the U.S. border.
López Obrador campaigned last year on a promise to decriminalize migration and told audiences it was not Mexico’s job to assist the United States with the “dirty work” of deportations.
Trump has backed down on previous threats aimed at Mexico. He abandoned his oft-repeated campaign promise to make that country pay for a border wall. Trump is now using the powers of his national emergency to redirect U.S. taxpayer funds for the construction of replacement fences and barriers along the border.
In late March, Trump said he would immediately shut down the entire border if the Mexican government didn’t take more steps to prevent the flow of migrants, only to announce a week later that he would delay any action for a year. White House officials had spent days frantically trying to design how such a shutdown would be implemented.
The draft trade agreement sent to Congress on Thursday would, if ratified, replace the 1994 NAFTA deal. The draft allows Trump to send a final agreement in 30 days, a timeline intended to pressure House Speaker Nancy Pelosi (D-Calif.), who along with other Democrats wants changes to the agreement before any vote.
The top imports from Mexico include vehicles, electrical machinery, machinery, mineral ­fuels, and optical and medical instruments, according to the Office of the U.S. Trade Representative. The United States also imports a large amount of agricultural products from Mexico.
A March 2019 report from the Congressional Research Service said that the 1977 International Emergency Economic Powers Act had never been used before “to place tariffs on imported products from a specific country” but that it could be interpreted as giving the White House that power.
Along the Mexico border, U.S. agents have detained more than 100,000 migrants for each of the past two months, and the numbers in May are expected to be the highest yet.
In recent months, smuggling organizations have been moving large numbers of migrants from southern Mexico using “express buses” that reach the U.S. border in a matter of days. The buses make few stops and have lowered the costs for migration, making the journey faster, easier and cheaper for would-be customers.
U.S. officials say corrupt Mexican officials are allowing the ­buses to pass through highway checkpoints and in other cases facilitating their travel to the border by providing security escorts.
Mexican officials have said they’re doing everything they can to regulate the migration surge, and they provide police escorts in some cases to prevent criminal organizations from kidnapping and extorting families traveling with small children.
A Mexican official, speaking on the condition of anonymity to discuss sensitive diplomatic negotiations, said trade-related talks with U.S. officials have remained “positive,” and noted that López Obrador was also preparing to send the trade deal to lawmakers for approval. The official declined to say whether the White House has conditioned the deal on a migration crackdown by Mexican authorities.
Kevin Sieff in Mexico City and Colby Itkowitz in Washington contributed to this report.

Source: The Washington Post

Business | Markets slide as Trump reignites trade worries with surprise tariffs on Mexico

Telegraph Reporters 31 May 2019 • 9:05am



  • US to impose 5pc tariff on all Mexican goods from June 10
  • FTSE 100 falls 0.8pc in early trade
  • Pound sinks to five-month low
  • Asian stock markets slide
  • Brent crude falls more than 1pc to $65.97
London's main stock index fell almost 1pc on Friday after US President Donald Trump's threat of tariffs on Mexico and disappointing manufacturing data from China focused minds on the threat of a global downturn.
The FTSE 100 shed 0.8pc and the mid-cap FTSE 250 fell 0.9pc in early trade. Both indices are on course for their first monthly falls this year, down 3.5pc and 4.5pc respectively since the start of May.
Data on Friday showed China's factory activity shrank more than expected in May, another stark reminder of the economic ramifications of the Sino-US trade dispute.
Combined with Mr Trump's Mexican standoff, that led London's indices of financial stocks and miners to give up more than 1pc each, while heavyweight oil stocks also skidded.
"The worry is who's next on Trump's list - the EU may be next," Markets.com analyst Neil Wilson said. "Coming at a time of a breakdown in talks with China, it's another blow to bulls and we should consider further downside risks from escalation."
Housebuilders also fell after mortgage lender Nationwide said British house price growth unexpectedly eased to its slowest rate in three months, shining a light on how lingering Brexit uncertainty is hitting consumer sentiment
The investor mood darkened further when a key measure of Chinese manufacturing activity for May disappointed, raising questions about the effectiveness of Beijing's stimulus steps.
Markets moved aggressively to price in deeper rate cuts by the Federal Reserve this year, while bond yields touched fresh lows and curves inverted further in a warning of recession.
Washington will impose a 5pc tariff on Mexican goods from June 10, which would then rise steadily to 25pc until illegal immigration across the southern border was stopped.
Mr Trump announced the decision on Twitter late on Thursday, catching markets completely by surprise.
"The mercurial President Trump has signalled via Twitter this morning that his mindset is shifting ever farther from reaching trade deals," warned Eleanor Creagh, a strategist at Saxo Capital Markets Australia.
"It seems now that market participants are finally realising that the narrative of [a recovery in the second half of the year] is fast dissipating," she added. "As escalating trade tensions across the globe cause growth expectations to be recalibrated, risk off sentiment will remain and volatility will increase."
Yields on the 10-year Treasury note quickly fell to a fresh 20-month low of 2.17pc, while the dollar jumped 1.7pc on the Mexican peso.
E-Mini futures for the S&P 500 slid 0.8pc and FTSE futures 0.4pc. Germany's DAX shed 0.7pc.
Asian shares fell at first, only to draw month-end bargain hunting having endured a torrid few weeks. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3pc, though it was still down a whopping 7.3pc for the month.
China's blue chip index held steady, partly on talk Beijing would now have to ramp up its stimulus, but again was nursing loses of 6.8pc for May.
Japan's Nikkei fell 1.6pc, dragged down by big falls in car makers.
Sterling was poised for the biggest monthly drop in a year as the imminent departure of Theresa May as prime minister deepened fears about a chaotic divorce from the European Union.
The pound hit $1.2611, nursing a 3.2pc loss for the month so far.
In commodity markets, spot gold firmed 0.4pc to $1,293.33 per ounce.
Oil prices fell to their lowest in almost three months on fears a global economic slowdown would crimp demand.
Brent crude futures lost 91 cents to $65.96.
Investors clearly reckoned that opening a new front in the trade wars would pressure central banks everywhere to consider new stimulus.
On Thursday, Federal Reserve Board of Governors Vice Chair Richard Clarida said the central bank would act if inflation stayed too low or global and financial risks endangered the economic outlook.
"What Clarida's comments have done is clarify in many people's minds the answer to the questions of whether low inflation proving more than transitory would itself be enough to get the Fed to ease – the answer appears to be 'yes'," said Ray Attrill, head of FX strategy at National Australia Bank.
"That served to reinforce prevailing market expectations that the Fed will be easing in the second half of this year."

Source: The Telegraph

US Market | Futures Indication | Dow is set to sink more than 250 points after Trump shocks markets with tariffs on Mexican imports

Sam Meredith, Eustance Huang



U.S. stock index futures were sharply lower Friday morning, as investors feared President Donald Trump’s threat of tariffs on all Mexico imports exacerbated the risk of recession.
Around 5:30 a.m. ET, Dow futures indicated a negative open of more than 250 points. Futures on the S&P and Nasdaq were both seen sharply lower.
Market participants moved aggressively to price in deeper rate cuts by the Federal Reserve over the coming months, while the closely watched 10-year Treasury yield dropped to lows not seen since 2017.
The U.S. benchmark was yielding 2.161% Friday morning. It was above 2.5% at the beginning of the month.
On Thursday evening, Trump announced the U.S. would impose a 5% tariff on all Mexican imports from June 10 until illegal immigration across the southern border was stopped.
The White House added in a statement that tariffs would be raised if the immigration issue persisted, with the charges set to increase even further if Mexico fails to take “dramatic action” to reduce or eliminate the problem.
The threat comes amid intensifying tensions between the U.S. and China, with the world’s two largest economies locked in a protracted trade dispute.
Washington and Beijing have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
The biggest Chinese newspaper explicitly warned the U.S. on Wednesday that China would be prepared to cut off rare earth minerals as a countermeasure.
Chinese Vice Foreign Minister Zhang Hanhui then said Thursday that provoking trade disputes amounted to “naked economic terrorism. ”
— CNBC’s Joanna Tan contributed to this report.

Source: CNBC

Asia | Asia Markets Closing Report on Friday 31, May 2019 | Asia stocks mixed as Chinese economic data disappoints; automakers tumble

Eustance Huang



Stocks in Asia were mixed on Friday as China’s manufacturing data fell below analysts’ expectations.
Japan’s Nikkei 225 slipped 1.63% to close at 20,601.19, while the Topix index also dropped 1.29% to finish its trading day at 1,512.28.
Mainland Chinese stocks were lower on the day, with the Shenzhen component slipping 0.23% to 8,922.69 and the Shanghai composite was declining 0.24% to 2,898.70. The Shenzhen composite was largely flat at 1,531.86.
Over in Australia, the ASX 200 rose fractionally to close at 6,396.90, while South Korea’s Kospi rose 0.14% to end the trading week at 2,041.74.
In Hong Kong, the Hang Seng index shed earlier gains to slip around 0.7%, as of its final hour of trading.
The moves in the region came as China’s manufacturing activity declined more than expected in May.
The official manufacturing Purchasing Managers’ Index (PMI) for May came in at 49.4, versus expectations of 49.9 by economists polled by Reuters. PMI readings above 50 indicate expansion, while those below that signal contraction.
If you look into the breakdowns and we can see that the trade related indices have all (fallen) quite significantly, ” Jian Chang, chief China economist at Barclays Asia Pacific, told CNBC’s “Street Signs” on Friday.

Source: CNBC
“The most recent tariff escalation on 10th of May, I think, has clearly played a role ... in driving down ... China’s orders and demands and also consumer and business sentiments,” Chang said, referring to the recent escalation of the trade fight between the U.S. and China.

Asia-Pacific Market Indexes Chart

TICKER COMPANY NAME PRICE CHANGE %CHANGE
NIKKEINikkei 225 IndexNIKKEI20601.19-341.34-1.63
HSIHang Seng IndexHSI26901.09-213.79-0.79
ASX 200S&P/ASX 200ASX 2006396.904.800.08
SHANGHAIShanghaiSHANGHAI2898.70-7.11-0.24
KOSPIKOSPI IndexKOSPI2041.742.940.14
CNBC 100CNBC 100 ASIA IDXCNBC 1007629.96-25.62-0.33
Automakers hit as US impose tariffs on Mexican goods
Meanwhile, futures pointed to declines for the major indexes on Wall Street at Friday’s open stateside after U.S. President Donald Trump announced that fresh tariffs would be slapped on all Mexican goods starting from June 10.
“I think Trump has always represented a tail-risk for the equity market and that tail-risk is becoming larger and larger by the day,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, told CNBC on Friday.
Shares of automakers in Asia took a hit from the tariff announcement, with many using Mexico as a production base to manufacture vehicles for export, according to data from Mexico’s auto industry association AMIA.
In Japan, Nissan dropped 5.31% and Toyota declined 2.85%, while South Korea’s Kia Motors fell 4.49%.
The ongoing trade fight between the U.S. and China also continues to weigh on markets, following a recent escalation in rhetoric.
Chinese Vice Foreign Minister Zhang Hanhui said Thursday that provoking trade disputes amounted to “naked economic terrorism. ” Also, China has reportedly halted soy purchases from the U.S.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.067 after touching an earlier high of 98.173.
The Japanese yen traded at 108.82 against the dollar after seeing an earlier low of 109.62, while the Australian dollar changed hands at $0.6910 after seeing a prior low of $0.6898.
Oil markets continued their slide in the afternoon of Asian trading hours on Friday. Brent crude futures fell by 1.87% to $65.62 per barrel, and U.S. crude futures also declined 1.38% to $55.81 per barrel.
— CNBC’s Fred Imbert and Huileng Tan contributed to this report.

Source: CNBC


May 30, 2019

US Market | Wall Street Closing Report on Tuesday 30, May, 2019 | Stocks rise slightly, but trade and economy worries persist

Fred Imbert





Stocks gave back their earlier gains on Thursday as Treasury yields reversed course to trade lower on the day as fears of a global economic slowdown persisted.
The Dow Jones Industrial Average traded 46 points lower while the S&P 500 dipped 0.2%. The Nasdaq Composite also dipped 0.2%. The three major averages traded higher earlier in the day.
Stock benchmarks traded into the red around the same time the 10-year Treasury yield went negative. The yield fell to 2.227%, near 20-month lows. The 10-year yield entered May trading above 2.5%.
Plunging yields this month, along with a yield curve inversion, have raised concerns about slowing economic growth. Investors typically see bonds as a safer alternative to riskier assets when economic worries arise.
“It definitely points to slower growth. That’s the primary driver right now in this risk-off environment we’ve experienced in the month of May,” said Ryan Nauman, market strategist at Informa Financial Intelligence, about the drop in yields. “People are rotating out of equities and into Treasurys for that defensive play.”
Bank shares followed yields lower. The SPDR KS&P Bank ETF (KBE) dropped 2.2% as Bank of America shares lost 2.5%. J.P. Morgan Chase also declined 1.4%.
The S&P 500 is down more than 5% this month and closed below 2,800 on Wednesday — a key level watched by traders — for the first time since late March.
There are “insufficient signs of bottoming” in the market, said Mark Newton, managing member at Newton Advisors, in a note. “Yet this will all take time. Until then, downside targets should take another 3-5 trading days with the 2722-35 [range] having significance for S&P. Closes back up above 2800, however, would be something to watch carefully.”
The protracted trade dispute between China and the U.S. also weighed on markets. A senior Chinese diplomat ramped up the rhetoric overnight. Also, China has halted soy purchases from the U.S., according to Bloomberg News.
Financial professionals work on the floor of the New York Stock Exchange (NYSE)
Drew Angerer | Getty Images
Chinese Vice Foreign Minister Zhang Hanhui said Thursday that provoking trade disputes amounted to “naked economic terrorism. ”
Washington and Beijing have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets. Earlier this month, both countries ratcheted up tensions through higher tariffs.
The higher levies pressured U.S. stocks in May, putting them on pace for their first monthly decline of 2019. Through Wednesday’s close, the S&P 500 and Dow are both down more than 5% while the Nasdaq is down 6.8%.
In economic news, the second read on first-quarter U.S. GDP showed the economy expanded by 3.1% on an annualized basis. The 3.1% print topped a Dow Jones estimate of 3%.
—CNBC’s Sam Meredith contributed to this report.

Source: CNBC

FX | Currencies | Dollar flat, poised for fourth month of gains

3 minutes




RT: Dollars dollar currency exchange 181203
A trader shows U.S. dollar notes at a currency exchange booth.
Akhtar Soomro | Reuters
The dollar was flat on Thursday, on track to post a fourth straight month of gains, as the trade stand-off between China and the United States prompted traders to put money into perceived safe currencies including the greenback.
Safe-haven demand lifted the dollar to a two-year high against a basket of currencies last week. Appetite for the greenback was somewhat curbed on Thursday as Wall Street stabilized following steep losses due to the trade worries.
The euro and sterling holding above key support levels at $1.11 and $1.26, respectively, also restrained the greenback’s momentum, analysts said.
“The dollar is getting tired at these levels,” said Dean Popplewell, chief currency strategist at Oanda. “Some people want to take off some of these positions before June.”
At 1:00 p.m., an index that tracks the dollar against six major currencies was flat at 98.14. It reached 98.371 a week ago, marking its strongest level since May 2017.
The S&P 500 was up 0.36%, while benchmark 10-year Treasury yields was 2.8 basis points higher at 2.264%.
The dollar index has increased 0.76% in May, putting it on track for four straight months of gains. The greenback will likely extend its monthly winning streak against the euro, which began in January. Signs of a sagging euro zone economy, together with worries about the rise of euro-sceptic political parties within member countries, have hurt the single currency.
The euro was 0.04% down at $1.1133, within striking distance of $1.11055 hit a week ago, which was a two-year low. The dollar has also remained resilient against the yen, despite the risk averse environment.
The greenback was 0.11% higher at 109.70 yen, rebounding from a two-week low on Wednesday. Analysts said the yen, a safe-haven currency backed by Japan’s status as the world’s biggest creditor nation, remained relatively weak because of domestic demand for dollars.
“As there’s persistent yen-selling and dollar-buying from Japanese investors when the rate approaches the 109.10 yen per dollar level, it’s not easy for the yen to rise above the 109 level,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Sterling was poised for the biggest monthly drop against the dollar in a year as the imminent departure of Theresa May as prime minister deepened fears about a chaotic exit for Britain from the European Union.
On Thursday, the pound was 0.10% higher at $1.2612.

Source: CNBC

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